Average house prices rose by 1.1% in October, compared with a fall of 0.3% in September, according to data from the latest Halifax House Price Index.
The typical home was found to cost £281,974, up around £3,000 on the previous month.
The latest house price data showed prices for first-time buyers were down 2.4% annually, a notably smaller fall than the market generally (-3.2%), over the past year.
Overall, however, the housing market remained subdued, with October marking the first rise in the cost of a typical UK home since March.
On a regional level, all UK nations and regions saw house prices decline on an annual basis.
The greatest fall was seen in South East England, where prices decreased by 6.0% over the last year, to an average of £374,066.
Scotland’s annual house price was the most resilient, down just 0.2% annually, with homes in the nation hitting an average of £202,608.
It was a similar picture in Northern Ireland, with a decline of 0.5%, and average house prices of £183,922.
Property prices in Wales fell by 3.9% over the year to £213,125.
London continued to have the highest average house prices in the UK, at £524,057, falling 4.6% over the past year.
Kim Kinnaird, director at Halifax Mortgages, said: “Prospective sellers appear to be taking a cautious attitude, leading to a low supply of homes for sale.
“This is likely to have strengthened prices in the short-term, rather than prices being driven by buyer demand, which remains weak overall.
“While many people will have seen their income grow through wage rises, higher interest rates and wider affordability pressures continue to be challenges for buyers.
“Across the medium-term, with financial markets not anticipating a decline in the Bank of England’s Base Rate soon, we expect house prices to fall further overall – with a return to growth from 2025.
“The current picture should continue to be seen in the context of the longer-term house price trend as, on average, prices remain around £40,000 above pre-pandemic levels.”
Reaction:
Guy Gittins, Foxtons CEO:
“While higher borrowing costs continue to present a challenge for the nation’s homebuyer, the property market remains ripe with opportunity for those who can overcome the initial hurdle of securing a mortgage offer and buyers and investors can still find good finance deals when working with a professional broker.
“The Bank of England’s decision to hold the base rate for a second consecutive time will only help to boost buyer confidence further and this increasing stability puts the property market in very good stead come January.”
Chris Hodgkinson, managing director of House Buyer Bureau:
“We may have seen the market take two steps backwards in recent months, but the latest figures suggest it has now taken one step forwards, with buyer confidence starting to grow once again.
“For those looking to sell, this means you may well be able to achieve that little bit more for your home.
“However, tread with caution as pricing with too much optimism will deter buyers and result in a far longer transaction timeline.”
Verona Frankish, CEO of Yopa:
“Today’s figures provide further proof that the property market has responded well to the Bank of England’s initial decision to freeze interest rates.
“With this remaining the case last week, we could well see a stronger finish to the year than many would have previously anticipated.
“Yes, the cost of borrowing remains high, but a static base rate will at least allow buyers to better ascertain their position in the market, giving them a stronger chance of making it through to completion before the goal posts are moved with respect to their mortgage offer.”
Marc von Grundherr, director of Benham and Reeves:
“It’s looking like Christmas has come early for the nation’s homeowners, as the market appears to be making a late rally, buoyed by a heightened degree of buyer activity following the hold on interest rates.
“House prices remain lower on an annual basis, but it looks as though we have seen a stop to the rot that was materialising over the last six months.”
James Forrester, managing director of Barrows and Forrester:
“More promising signs but it’s important to note that this market view is based on the price that mortgages are being approved at, not the price homes are actually selling for.
“So while the latest figures suggest that confidence is building amongst the nation’s homebuyers, it will take some time yet before this translates to an uplift with respect to the price achieved by home sellers.”
Charlotte Nixon, mortgage expert at Quilter:
“The latest Halifax house price data shows a surprise 1.1% increase in prices despite very subdued transaction levels in the market.
“We are yet to see a huge influx of properties on the market, which if paired with this low demand will have a negative impact on prices.
“But because potential sellers are holding out, stock levels remain tight and therefore the buyers who are out in the market are still having to compete keeping levels relatively buoyant.
“However, prices are still down by -3.2% compared to last year.
“Yet, despite these drops, the typical UK home still stands at £281,974, which is still not far off early 2022 levels, still significantly above pre-pandemic values and up £3,000 on the previous month.
“This shows that even as we’ve weathered a storm of rate rises, the value of bricks and mortar has held a relatively steadfast course through the economic difficulties of the cost-of-living crisis.
“The Bank of England just last week opted to hold rates and the reality is we may all need to get used to rates at this level as we enter a “higher for longer” phase. The result of this will not be a housing market in freefall but one that is recalibrating after a period of cheap debt-fuelled buoyancy.
“As mortgage deals come up for renewal, the landscape will continue to shift especially considering ultra-low mortgage rates are now a relic of the past.
“This will force some people to sell, pushing prices down. For many sellers, especially in the south where the greatest price pressures are felt, the current situation is a reminder that price resilience is a regional affair as in South East England prices decreased by -6.0% over the last year.
“While some buyers may hold out for pre-pandemic valuations, the interplay of supply and demand, coupled with shifting economic winds, may necessitate a new approach to price negotiations.
“For those considering their next move, the strategy is less about rushing in and more about measured decisions that suit your life needs in the here and now rather than trying to time the market.
“Demand will start to return as even in this difficult financial time, buying a home remains a priority for many.
“The reduction in buyer demand will return as these higher rates can’t completely quench the desire to own a home. First-time buyers, in particular, are still a driving force, bolstered by contributions from the Bank of Mum and Dad and weighed against the rising costs of renting.
“Patience and preparation are key for both sellers and buyers in the current market. Whether you’re planning to buy, sell, or remortgage, it’s essential to keep a close eye on economic indicators and to seek advice tailored to your financial circumstances.”
Craig Fish, director at Lodestone Mortgages & Protection:
“Now not many people expected that. If you thought the Nationwide was a surprise, this was twice that.
“It highlights how the lack of supply, and growing demand, albeit slowly, are starting to feed back into average values.
“We shouldn’t expect prices to rebound like this each month as that’s highly unlikely but we may be close to the bottom now, if not already there.”
Graham Cox, founder at Self-Employed Mortgage Broker SEMH:
“Don’t be fooled by recent house price indices claiming average prices are rising. Averages lie.
“What I suspect they actually show is a higher proportion of transactions happening at the top end of the market, where there are more cash buyers, and a big drop off in transactions at the low-mid price range.
“This makes sense if you think about how unaffordable it is for first-time buyers to purchase a home at the moment.
“So the average property transaction value is correctly reported as going up but misleadingly passed off by lenders as the average house price increasing. It’s not.
“In my opinion, house prices are falling sharply across the board right now. And in all likelihood, will continue to do so throughout 2024.”
Bob Singh, founder at Chess Mortgages:
“Last week’s base rate decision gave comfort to some but for most the misery continues. Prices are expected to carry on falling despite being supported by the lack of supply.
“The market is likely to bottom out soon and could then rebound with the first hint of a possible rate cut.
“Despite the Bank of England saying it will not be any time soon, I feel will come sooner than expected as Threadneedle Street will not want the economy to go into recession.
“We may get a cut next summer provided inflation has come back to target or not far off.”
Jonathan Gordon, director of Wealth Management at IP Global:
“It’s all about supply, and there’s not much of it.
“Construction constraints, as seen in Monday’s Construction PMI, coupled with predictions that interest rates have hit their peak are starting to see price stabilisation.
“Many buyers are sitting on their hands under the impression that prices will drop significantly, which is unlikely given supply constraints.
“Buyers holding out for prices to fall a lot more could find it backfires. This latest data from the Halifax certainly appears to suggest that.
“With the base rate being left on hold again last week, there is a chance prices may have bottomed or, at least, not be far off the bottom assuming inflation continues to fall.”
Ross McMillan, owner and mortgage adviser at Blue Fish Mortgage Solutions:
“In Scotland, first-time buyers are definitely on the rise but many are now planning their house-buying for early 2024 rather than rushing for a pre-Christmas purchase.
“Many believe that the Bank of England’s rate hold last week suggests rates may have peaked and it’s this hope, rather than any national price data or forlorn expectations of house price crashes, that is currently boosting confidence in the Scottish property market.
“The usual supply/demand imbalance persists, and competitive closing dates are still the norm. This is especially the case in Glasgow and Edinburgh, with jaw-dropping percentages above valuations frequently still occurring.
“Buy-to-let remains stagnant, though and, with the dark nights now upon us, 2023 will likely end quietly.
“However, it feels likely that sparks, and possibly house prices, could be set to fly as soon as the Hogmanay fireworks and bells usher in 2024.”
Ranald Mitchell, director at Charwin Private Clients:
“It has been a miserable year for the property market and house prices have taken a hit.
“There are signs, though, that property prices may be bottoming out. In October, we saw a significant uptick in purchase enquiries, despite the cost of mortgage borrowing, with buyers feeling more empowered than they have for a long time and sensing their opportunity to grab a bargain.
“There certainly won’t be fireworks in the property market during the next six months but activity levels will slowly start to recover.
“The real catalyst in jump-starting the property market will come from the increasing pressures on mortgage lenders to reprice downwards.
“They need to get money changing hands again. With the Autumn Statement approaching, the market needs to correct itself without more artificial props.”
Stephen Perkins, managing director at Yellow Brick Mortgages:
“After last week’s Nationwide house price curveball, we’ve got another.
“The lack of supply is certainly pivotal to these upticks in house prices but demand is also picking up as more and more buyers sense a bargain.
“First-time buyers in particular are in a strong position and know that they hold a lot of bargaining power at present.
“The stupendously high cost of renting is also encouraging them to buy even though mortgage rates are much higher than what they were.
“Nobody is expecting a spectacular recovery in the property market but predictions of further drops of 10% and above are starting to ring hollow.”
Rhys Schofield, brand director at Peak Mortgages and Protection:
“Mortgage rates staying the same or even improving slightly with house prices not really doing much all points to a period of calmness and stability.
“This just feels like what the market was like pre-Covid and that’s fine.
“Runaway growth doesn’t help first-time buyers get on the ladder and is only good for property developers and the banks.”
Simon Bridgland, broker and director at Release Freedom:
“Though this data suggests house prices are rising, I still expect activity levels to remain pretty flat now until the new year.
“Demand is still there but a lot of would-be buyers are still sitting tight hoping for further falls in prices, but they need to be wary based on this evidence.
“As we head into the festive period and new year, buyers may start to realise that prices have shown good signs of finding their true level already.
“The new year will likely show more house buyers return with gusto assuming inflation keeps its steady return to lower levels.
“I cannot see prices increasing for some considerable time to come, given that housing stock is in a much better place than a year ago and so plenty of it needs to change hands before demand starts to outstrip supply.”
Malcolm Davidson, director at UK Moneyman:
“I’m not seeing many buyers sitting on their hands waiting for property values to fall, but some are certainly still waiting for the return of lower fixed-rate mortgages.
“But given that the Bank of England has stated twice in the past three months that interest rates are likely to remain high until inflation is well and truly behind us, that could well be a long wait.
“The first sound each year of Mariah Carey also starts to see activity levels drop off but, as in previous years, we are expecting a busy January.
“Top of my own Christmas list is the Government making clear what their intentions are on Stamp Duty.
“Buyers certainly don’t need rumours of another SDLT holiday to use as an excuse for not proceeding with their plans to move home.”
Austyn Johnson, founder at Mortgages For Actors:
“The base rate being held shows things are going in the right direction on the inflation front.
“What it doesn’t take into account is the fact that property sales have bottomed out.
“When lenders readjust their prices to be competitive, properties will be bought again and lift inflation up slightly.
“They threw a rock into a pond and are now ignoring the ripples it made.
“We will be in this up and down for a bit longer I think. Property prices will reflect this.
“Hopefully, the government or lenders will find a way to help first-time buyers back into the market and give them the affordability they need.”
John Choong, senior equity research analyst at Investing Reviews:
“Considering the fact that only 7% of UK housing was built in this millennium, it’s no surprise to see a lack of supply propping up prices.
“In fact, the UK has some of the lowest levels of housing in Europe, which indicates that high prices are likely to stay.
“Given that 70% of mortgage debt is also held by the top four income deciles, it’s unlikely that high mortgage rates will lead to a mass sell-off in properties.
“And with the Bank of England also pricing in more rate cuts going into 2026 with weaker GDP forecasts, swap rates should continue to come down and provide further relief on the demand side. This should see a bottom in house prices coming soon.”
Sarah Coles, head of personal finance, Hargreaves Lansdown:
“House prices rose in October, for the first time in six months. This looks good on paper for sellers, but to get a higher price on your property, you have to flog it first, and that’s far easier said than done.
“House prices have proven fairly resilient. They’re down 3.2% in a year, but we’re still sitting on enormous gains since the onset of the pandemic.
“And while prices are likely to drift further south in the coming months, they’re holding up impressively in the face of horrible pressure – actually rising in October.
“However, this isn’t because buyers are rushing back to the market: they’re still horribly thin on the ground.
“The resilience of house prices is due to the fact that so many sellers have decided to stay away for now too.
“According to Rightmove, it takes around 60 days to agree a sale at the moment – roughly double the time it took during the pandemic boom.
“And there’s no real sign of a significant shift in the immediate future. The miserable level of mortgages approved for September is a decent indication the rest of the year will be fairly deathly.
“It may take a significant shift in mortgage rates before more enthusiasm returns to the market.
“With the Bank of England indicating it’s unlikely to cut rates until around the middle of next year – and even then cuts are likely to be slow and incremental – we may be in for quite a wait. A stronger market might take until 2025 to materialise.
“Some buyers and sellers will be keen to move anyway. Your home is first and foremost somewhere to live, and you can’t always hang on to time the market perfectly.
“In this kind of a market, the key for sellers is to price their property realistically. Getting it right first time makes a massive difference, because you can capitalise on the initial interest and secure a sale.
“If you overprice, and end up cutting, you’ll squander this interest and be set for an uphill struggle.
“Zoopla figures show the average price reduction is now over 4% – and once you have cut once, there’s always the risk you will need to do so again.
“Some buyers will use this opportunity to make a cheeky offer or two. Others will prefer to sit on their hands.
“If you choose to wait, it’s vital that your deposit is working as hard as possible for you in the interim. You’re likely to need to get your hands on your cash at relatively short notice, so it makes sense to find a competitive easy access account.
“Assuming you’re happy to take it all out in one go – or a handful of withdrawals – an account with a limited number of permitted withdrawals could offer you a better rate, so is well worth considering.”
